ETF Prime: Advisors Bullish On Markets Despite Three-Year Rally

• The 'belly of the curve' (3-7 year duration) emerged as a potential sweet spot if short-term rates fall while long-term rates stay elevated due to inflation concerns
• International equities tied with small caps at 21% for planned additions, boosted by China's 30%+ performance in 2025
• Crypto interest is purely speculative - 50% cite growth opportunities and 22% FOMO, but 0% believe in the underlying blockchain technology

ETF Prime: Advisors Bullish Despite Three-Year Rally

VettaFi's Cinthia Murphy shared findings from a recent advisor survey (mid-November to late December) revealing continued market optimism. Key findings include:

Interest Rate Outlook: 75% of advisors expect lower rates by year-end 2026, with only 7% anticipating increases. The three- to seven-year duration range emerged as a potential sweet spot, as short-term rates may decline while inflation concerns maintain elevated long-term rates.

Asset Allocation Plans for 2026:

• Large cap U.S. equities lead at 30%
• Small cap U.S. and international equities tied at 21% each
• International markets gained traction following strong 2025 performance, with China up over 30%

Cryptocurrency Exposure: Survey data reveals limited crypto adoption among advisor clients:

• 53% hold zero crypto exposure
• 38% maintain 1-10% allocation
• Primary motivations for crypto interest: speculative growth (50%), diversification (28%), and FOMO (22%)
• Notably, 0% cited belief in underlying blockchain technology

The disconnect between industry blockchain discussions and real-world advisor conversations highlights a significant gap in crypto adoption drivers.

Brittany Christiansen from Tidal Financial Group, which manages over 350 ETFs across 90 issuers, also appeared on the podcast discussing multi-issuer ETF management.

Market Implications: Despite the extended three-year rally, advisors remain constructive on equities, particularly U.S. large caps. The expectation of lower rates could support continued equity strength, while renewed international interest suggests potential diversification opportunities. Limited crypto adoption among traditional advisors indicates the asset class remains primarily speculative rather than a core portfolio component.